J & J Case CompetitionFebruary 28, 2013Rider University: Bryan Griffith, Joshua Malcolm, Allison Fabiano, John Mancini

• Pantheon Health:• Known for its diverse portfolio in the Pharmaceutical

Sector• Possible acquisition, license or development of late stage

prostate hormone medication, Abira

• Six distinct business decisions to make:• License, Buy or Develop In-house• Secondary Development• Pricing Strategy• Delivery Mechanism• Marketing Strategy• Patient Assistance Fund

Central Issue

“In meeting their needs everything we do must be of high

quality.”

“We must constantly strive to reduce our

costs in order to maintain reasonable

prices.”

“We are responsible to the communities in which we live and

work and to the world community as

well.”

“We must be good citizens, support good works and

charities and bear our fair share of

taxes.”

“Our final responsibility is to our stockholder.

Business must make a sound profit.”

“We must experiment with new ideas. Research must

be carried on, innovative programs

developed and mistakes paid for.”

Pantheon Health’s Credo

Evaluating Target Market

African American, Caucasian, and Asian men aged 65+African American, Caucasian, and Asian men aged 40-65

All men aged 40+

Environmental Analysis: SWOT

-High Brand Equity-Experience in the oncology therapeutic area

-No hormone oncology drugs-Acquisition or development costs of Abira

-Growing Population of Males over 40 years old-Ability to enter late stage cancer market

-Competition-Economic Climate-Other developments in prostate cancer medication-FDA approval time

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

Category Drug 1 Drug 2 Drug 3 Drug 4

Competitor Proton Astrix Vedimation Abira

Commercial stage

Launched 2010

Launched 2010

Launch Est. 2014

Launch Est. 2016

Frequency Every 2 weeks

Every 3 weeks

4x/day Once a month

Cost $31,000 per infusion

$6,000 per treatment

$7,450 per month

$5,000 per month

Length of Treatment

3 infusions 6 treatments

8 months 8 months

Est. 2012 sales

$800MM $600MM N/A N/A

Therapy market share

22% 17% N/A N/A

Improved Survival

4.1 months 2.4 months 4.8 months 4 months

Competitive Analysis

Alternative Solutions/StrategiesBusiness Decisions

Alternative Solutions: Product

Benefits Drawbacks

License

-Launch in year 4-Opportunity to purchase at year 5-Phase 3 asset

-Limited control over product-15% of NTS in Royalty Payments-Milestone payment of 50mm in year 3

Buy

-Launch in year 4-Phase 3 asset-No royalty or milestone payments-More control-Approved by FDA

-Acquisition cost of 225mm-Locked into investment

Develop In-house-Absolute control-Potential Partner with Zephyr for phase 3 costs

-Just starting phase 2 trials-Launch in year 6-High costs

Alternative Solutions: Secondary

Development

Benefits Drawbacks

Buy

-More control over product-No more royalty payments

-Acquisition cost of 175mm in year 5

Line Extension

-Increase in patent life-Broad base of patients-Increase in market share-Proved effective for pre-chemo

-Not approved by FDA-Risk of 200mm

Partnership with Zephyr

-Share costs for phase 3 development-Launch at beginning of year 5

-Reduction of NTS by 25% per year

No Action -Less risk -No innovation

Alternative Solutions: Pricing

Strategy

Benefits Drawbacks

$4,500-Increase in market share by 1.5%

-Lower revenue-Potential low quality perception

$5,000-Reasonable revenue with no loss of market share

-No gain in market share

$5,500

-Highest potential revenue-Potential high quality perception

-Decrease in market share by 1.5%

Alternative Solutions: Delivery

Mechanism

Benefits Drawbacks

Orally

-Most convenient treatment option- Generally preferred by patients- Lower manufacturing costs-Easiest to scale into full production

-Patient compliance (Forget to take medicine)-Drop in market share in year 2-Perceived lower quality-Four pills everyday

Intravenous

-Administered by a health professional-Greater compliance with recommended dosage-By year 2 market share increased by .7%-Only once per month

-Lower adoption to delivery mechanism-Higher manufacturing costs -Patients have to find transportation to doctors office-Initial drop in market share in year 1

Alternative Solutions: Marketing Strategy

Benefits Drawbacks

Basic

-Affordable-Work directly with Oncologists

-No direct to consumer advertising-No increase in market share

Premium

-Direct to consumer advertising-Builds relationship with consumer-Increase in market share-Does not rely solely on Oncologists

-More expensive-DTC advertisements does not guarantee better brand perception-Reactive marketing approach

Premium Plus

-Targets Urologists-Increase in market share-Proactive marketing approach

-Most expensive-Urologists prefer not to write prescriptions-Does not guarantee larger Abira awareness

Alternative Solutions:

Patient Assistance Fund

Benefits Drawbacks

Yes

-Aligns with the credo-Fulfills societal responsibility-Increase in market share by .05%-Generate goodwill and positive perception for Pantheon

-200mm investment

No-Saves money -Losing potential

positive perception

Recommended StrategyOur group’s recommendationsFinancial Analysis

Decisions Years 1-5 Years 6-10

Development Buy Line Extension

Pricing $5,000 $4,802

Pricing Changes Decrease Decrease

Delivery Mechanism

Intravenous Intravenous

Marketing Strategy Premium Premium

Patient Assistance Fund

Yes Yes

• Pantheon’s Objectives/Assumptions:• Expand customer base• Gain a return on investment to buy Abira• Become market leader in hormone therapy

market• Prostate cancer population will increase• Our estimates for market growth are

accurate

• Buy:• More control over production quality and monitoring• Launch product in the beginning of year 4• Allows for continued development of the product• No royalty and milestone payments

“In meeting their needs everything we do must be of high quality.”

• Line Extension: • Increase in patent life• Broader base of patients• Increase in market share• Effective for pre-chemo

“We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for.”

Recommended Strategy: Buy and Line Extension

• $5,000 Launch Price Point:• Reasonable revenue with affordable price• No loss of market share

• Decrease price:• Aligns with the credo• Higher market share

“We must constantly strive to reduce our costs in order to maintain reasonable prices.”

Recommended Strategy: Pricing and Price Changes

• Intravenous:• Administered by a health professional• Reflects higher quality of product and patient care• Matches our marketing strategy of providing support

• Only once a month• Greater patient compliance• Overall increase in market share

“Customers’ orders must be serviced promptly and accurately.”

Recommended Strategy: Delivery Mechanism

• Premium Marketing Strategy:• Direct to consumer (DTC) advertising• Builds relationship between brand and patients• Spreads information to both doctors and patients

• Increase in market share by .75%• Does not solely rely on Oncologist

recommendation

Recommended Strategy: Marketing Strategy

• Yes:• Aligns with the credo of Pantheon • Fulfills societal responsibility to help the

community• Increase market share by .05%• Generates goodwill and has a positive impact on

consumers’ perception of Pantheon

“We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens, support good works and charities and bear our fair share of taxes.”

Recommended Strategy: Patient Assistance Fund

Recommended Strategy: Decision Outcome

Years ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21 ‘22 Total

Net Incom

e

- (31) (31)

(31) 102 127 210 209 209 209 209 1,181

Net Cash Flow

(225)

(31) (31)

(31) 67 142 226 231 231 231 231 1,041

In millions of dollars

Cumulative Sales: $4,715,000,000

Peak Share 16.8%

Cumulative Sales $4,714 (In millions)

Cumulative Net Income $1,181 (In millions)

Net Present Value (NPV) 372

Internal Rate of Return (IRR) 24%

Recommended Strategy: Financial Highlights

“Our final responsibility is to our stockholders. Business must make a sound profit.”

Sensitivity AnalysisReserved, Anticipated, Optimal

Decision Points Reserved Anticipated Optimal

License, Buy, DIh License Buy Buy

Buy, Line Ext, NA No Action Line Extension

Line Extension

Pricing $4,500 $5,000 $5,500

Future Price Flat Decrease Decrease

Delivery Mech Intravenous

Intravenous Intravenous

Marketing Basic Premium Premium Plus

Patient Asst. Fund

Yes Yes Yes

Avg Mkt Share 15% 15.9% 15.1%

Net Income (Millions of Dollars)

$868 $1,181 $1,224

Net Present Value

356 372 392

Internal Rate of Return

55% 24% 25%

Sensitivity Analysis

Cash flow Comparison

0 1 2 3 4 5 6 7 8 9 10-300

-200

-100

0

100

200

300

ReservedAnticipatedOptimal

Marketing: Branding, Promotions, Consumer Relationships

Marketing Strategy

Motivate men to take control of their disease

Empower men by giving them great supportWorld campaign to spread

awareness about prostate

cancer

Content

marketing

Creatively explore men’s need for control

“Support You Deserve” Campaign

Campaign promotes the idea that support (financial and psychological) is something everyone deserves.

Gives older men the opportunity to learn about prostate cancer in a meaningful and informative way.

Traditional DTC advertising that will take advantage of print promotions like posters, brochures, newsletters, and personalized direct mail.

“Your Support In Your Hands” Campaign

Empowers men by giving them the opportunity to build their own support group.

Content marketing strategy that will take advantage of interactive and social media for an online digital support group.

Proactive campaign

Will include poster designs, direct mail and interactive media.

Note: All print promotions will guide reader to website

Collaboration Campaign

Work with other prostate cancer support groups to help spread awareness and information about prostate cancer

Executive Summary

Buy Abira Line extension

$5,000 price point with

future decrease

Intravenous delivery

Premium marketing strategy

Yes to patient

assistance fund